This article reviews and synthesises relevant literature and policy developments concerning the challenges involved in ensuring effective competition in public procurement markets. The overall point of view of the article is that both trade liberalisation and national competition policies have important roles to play in promoting competition in such markets, and that neither is likely to fully achieve its objectives in the absence of the other. In this sense, the roles of competition and trade policy are complementary. While the article draws particularly on policy developments and experience in the United States and (to a lesser extent) Europe, an effort is made to illustrate the universality of the issues raised and their significance for developing as well as developed countries.

The remainder of the article is organised as follows. Part 2 reviews basic economic theoretical considerations and evidence concerning the importance of competition in procurement markets, based on existing literature. Part 3 discusses the role of international liberalisation (for example, via the WTO Agreement on Government Procurement) in promoting competition in such markets. Part 4 discusses and reviews relevant literature concerning the complementary role of national competition policies in regard to public procurement markets.9 This encompasses: (1) the importance and content of rules to prevent collusive tendering; (2) the role of such policy in addressing regulatory and other barriers to competition, chiefly through ‘‘competition advocacy’’ activities; and (3) the application of other aspects of competition law including the treatment of mergers and joint ventures. Part 5 illustrates some of the points developed in Parts 3 and 4 with reference to developments concerning transatlantic defence procurement. Part 6 provides concluding remarks.